Taxpayer Identity Theft

Ervin Cohen & Jessup LLP
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Recently, there has been a spike in felons filing fraudulent income tax returns seeking refunds. The identity thief merely acquires a taxpayer’s name, address and Social Security Number, and files a return with a different address and a refund calculated in the return. Unfortunately, the computers at the Internal Revenue Service are incapable of singling out fraudulent returns, and you may not find out about the identity theft until you actually file your own return, and the IRS computers respond by sending you a letter informing you that, on their records, you already filed a return and the notice will go on to detail your “miscalculation” based upon the prior refund paid on your account.

Aside from the normal warnings about protecting your records, not carrying your Social Security card around in your wallet and protecting your computers with anti-spam and anti-virus software and frequently changing your passwords, you should remember that the IRS never makes phone calls about taxes owed without first mailing a notice to you with an invoice. If you get such a call and you don’t believe you owe any more taxes, call the Treasury Inspector General for Tax Administration toll-free at 1-800-366-4484.

But if you find out that you’ve been a victim of identity theft through the IRS, you should first file a police report, file a report with the Federal Trade Commission using the FTC Complaint Assistant here, and also notify one of the three credit bureaus so they can place a freeze on your accounts. Here are the three credit bureaus to contact:

www.Equifax.com 1-800-525-6285

www.Experian.com 1-888-397-3742

www.TransUnion.com 1-800-680-7289

As far as the IRS, you should file (via mail or fax) an IRS Form 14039, Identity Theft Affidavit, which you can obtain here. We recommend that you timely file your true returns and pay your taxes as if the identity theft hadn’t occurred. Once the IRS verifies that you’re the real deal, they’ll mail you a letter notice to tell you that they’re monitoring your account. In a few pilot states (not yet California) the IRS may issue to you a special Identity Protection Personal Identification Number (IP PIN) for tax filing purposes, which is a unique six-digit number which you will use when filing your real tax returns.

If you suspect or are aware of anyone committing tax fraud via identity theft, you should report it to the IRS here.

For more information regarding income tax related identity theft, go here or read the IRS Guide to Identity Theft here and watch the IRS’s YouTube video about identity theft here.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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